The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

Beijing Apple store

Apple registered record sales of $4.5 billion in China, or 16% of total sales, in the company’s most recent quarter.

In fiscal year 2011, revenues in China grew to $13 billion, or 13% of total sales, up from about $3 billion, or 2% of total sales, in 2009. As CEO Tim Cook said in the earnings call, this is Apple’s fastest growing region by far.

Since the iPhone accounts for over half of Apple’s stock, according to the Trefis analysis, and provided that Apple and China Mobile will soon sign a carrier contract giving the company access to its around 650 million subscribers, this has the ability to move the stock as Chinese buyers snap up new phones. Currently, China Unicom is the exclusive mobile service provider of the iPhone in China.

Apple opened 30 new stores in the latest quarter, of which only 9 were in the United States. The Hong Kong store opened in the last weekend of the quarter and set a company record for the highest opening day sales.

Greater China now has 6 Apple stores. Given the U.S. as a model, Apple retail stores provide a way to better engage customers and sell more phones in this key market as it opens new stores.

For mainland China, China Unicom has been the exclusive carrier so far, which has been a boon to the mobile operator. However, China Mobile and Apple appear very close to reaching a deal on its plans to carry the phone. The carrier is already selling and promoting the iPhone around Beijing in the hopes of signing up customers to its Wi-Fi plan in anticipation of a pending deal.

Once signed, this will be a huge boost to Apple as China Mobile is by far the biggest mobile operator with around 650 million subscribers. For perspective, China Mobile has a Trefis valuation of close to $230 billion while China Unicom’s valuation is just over $50 billion, supported by its 170 million subscribers.

China Presents Tremendous Growth

“We’re really doing everything basically that we’re doing in the United States, we’re doing in China”

- Tim Cook, Apple CEO

The company has plans for large scale expansion with significant investment in the country. It has left no stone unturned as it aims to expand both its online store and retail presence. Apple is also concentrating on building third party channels and is spending a significant amount on advertising for promotions in the country as Cook and crew see ample long opportunity for growth.